The good old days will return

In his best-selling book, Canadian economist Jeff Rubin explains how rising energy prices will affect our daily lives

Increases in oil prices kickstarted the recent recession, but filling up at the pump is bound to get more expensive as oil becomes scarcer, according to Jeff Rubin’s book.
Increases in oil prices kickstarted the recent recession, but filling up at the pump is bound to get more expensive as oil becomes scarcer, according to Jeff Rubin’s book.
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Why Your World is About to Get a Whole Lot Smaller
Why Your World is About to Get a Whole Lot Smaller
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By Jeff Rubin Copyright 2009

If Jeff Rubin is right, you can say goodbye to Atlantic salmon and Florida oranges in the wintertime—at least for the foreseeable future.

For nearly two decades before stepping down earlier this year, Rubin was the CIBC World Markets chief economist. He has become known for accurately predicting fluctuations in the Canadian dollar, interest rates and trends in the real estate market. He was also one of the first economists to predict the rise in oil prices to triple digits that occurred in 2008.

From that reputation comes Rubin’s first book, Why Your World is About to Get a Whole Lot Smaller. The book is now sitting in the fifth spot of the Globe and Mail bestseller list.

Rubin tells us the developed world’s dependence on oil is about to lead us down a radically new path. Although oil use has shrunk as a percentage of GDP, we’re still using more of it than ever before. It’s also harder and more expensive to drill it, a trend that will only continue.

Oil prices are always linked to economic growth. Recessions in 1973, 1991 and last year were all preceded by a spike in oil prices. Whenever this one ends, Rubin expects oil prices to shoot up again—this time for good.

Rubin notes the service sector has grown to 70 per cent of America’s GDP since the 1950s, while manufacturing has fallen from 30 per cent to 10 per cent, meaning few manufactured goods sold in America are produced domestically. Soon, though, it will make more economic sense to buy locally than import from China or India. Our own worlds will become a lot smaller, but the world itself will seem much bigger. Local economies will spring up yet again. North America’s industrial heartlands will be revitalized, because it’ll be cheaper to trade locally than ship from abroad.

Ultimately, Rubin writes, the basic equation that links oil consumption to economic growth needs to change. Whether that’s happening anytime soon is up for debate – but until it does, say goodbye to that varied selection of French wine at the LCBO. For anyone who hears about oil depletion all the time but isn’t quite sure what it actually means for our lifestyles, this book is a must-read. Reading a book by a leading economist is sometimes intimidating—they’re often loaded up with graphs and tables, enough to scare away the average liberal arts student—but Rubin presents his arguments in a compelling and accessible way. No scary data charts here.

Although it’s a great read, the book’s limited by its purely economic focus. Rubin takes a thorough look at the economic ramifications of peak oil, but only briefly alludes to its potential societal effects near the end of one of the chapters when he notes that in times of recession, people generally get more xenophobic.

Rubin isn’t a political scientist, and he isn’t trying to be. A reader looking for more than an economic analysis of the effects of peak oil is probably in the wrong place. But Why Your World is About to Get a Whole Lot Smaller is a must-read for anyone interested in our planet’s economic future.

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